‍Returns are the norm. There can’t be a D2C without returns.

And there can’t be a brand without regular frequency of return, especially in India.

In 2024, it can be expected that thousands of items across hundreds of industries will be returned (every day) in exchange for cash or other products.  

So, hgow to make returns your competitive edge

It’s a fact that every year more transactions are happening online and more people are getting comfortable with shopping on the web instead of shopping in person. 

Today, e-commerce has reached a critical point where a significant number of the adult population is actively shopping online for clothes, household items, mechanical parts, decorations and more. Shoppers have formed a baseline expectation of what a good experience should be like based on comparing the multiple sites they actively shop with.
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The right way to manage ecommerce returns that ensures profitability

Annually, over 500 million people actively participate in e-commerce in India, a market that continues to experience significant growth. Considering the adult population of India, which stands at [insert appropriate figure], this indicates a substantial penetration of online shopping.

As D2C ecommerce gained widespread acceptance in India, there is a growing recognition of the pivotal role a seamless return experience plays in customer satisfaction. Particularly in sectors like fashion, where return rates surpass 35%, the implementation of efficient return management systems becomes indispensable for sustained success.

Pragma's Return Management System (RMS) is actively addressing this need in the Indian market. By leveraging insights from discussions with over 2,500 merchants, including notable Indian brands such as Neeman’s, Rare Rabbit, Faces Canada, and Glamrs, Pragma stands out as a leader in understanding and enhancing the return experience for both merchants and shoppers.

In the competitive landscape of Indian D2C e-commerce, establishing a user-friendly return process is not only essential but also a strategic differentiator. Pragma's commitment to learning from industry leaders and customising solutions to meet the specific needs of the Indian market positions it as a valuable ally for e-commerce businesses striving to excel in customer satisfaction and operational efficiency.

In order to understand shoppers, we asked 1,000+ consumers across India about their expectations with online returns.

What are the reasons which cause ecommerce returns?

Product Sizing and Fit Issues: Customers might receive items that don't fit as expected or match their size preferences.

Product Quality Concerns: Customers may receive products that differ in quality from their expectations or have manufacturing defects.

Mismatched Expectations: Sometimes, products may not meet customers' expectations based on product descriptions, images, or reviews.

Shipping Damage: Items can get damaged during transit, leading to returns.

Wrong Product Shipped: Errors in fulfillment can result in customers receiving the wrong items.

Changed Mind or Buyer's Remorse: Customers may return items due to reasons unrelated to the product itself, such as changing their mind after purchase.

‍What makes the return experience pragmatic for consumers?

When asked about the state of returns, consumers had three key messages:

1. Returns are the new normal. There is a baseline expectation of convenience formed by comparing the return experience across multiple retailers they shop with. They expect to return easily and be able to try at home without incurring extra costs or risks if they decide to return.
2. Returns affect their decision to purchase or not. Most shoppers do read the return policy and they will stay away from any retailers that make their policy unclear, complex or simply not customer-centric enough.
3. Returns build trust and loyalty. Shoppers that return the most are also the most loyal. They engage with the brand and the return policy can encourage them to buy more, growing long term customer lifetime value.
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Let’s take a look at the data behind each of these three topics:
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1: Returns are the new normal.

• 89% of consumers have returned an online purchase in the last three years. The return touchpoint is now mainstream and affects most of your customers.
• 41% buy the same item in multiple sizes or variations, with the intent to return some of them.
• 58% of shoppers mentioned that adding return friction with extra email or phone communication results in a negative return experience. One irritant that comes up often is the lack of clarity to track a return status. Many shoppers are worried about their returns getting lost.
• 80% of consumers expect free returns, while only 25% of retailers offer free returns. This tells a lot about the challenge retailers face to meet the shoppers expectations.
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2: Returns affect their decision to purchase or not.

• 83% of consumers read the return policy before buying. It pays to optimise your policy for conversion like any other copy. Unfortunately many retailers show their policy in fine prints, long and complex language which is not customer-centric. Changes in the return policy should be tested to understand impact on conversion and costs.
• 71% of customers find that a restocking fee or shipping fee can prevent them from making a purchase. This high varies by country and product category. Fashion is the category where most shoppers expect free returns.
• 57% of customers believe that the return window should be at least 30 days. Increasing the return window gives them comfort that they will have time to make up their mind without risking missing the window. A long return window decreases urgency to return; shoppers tend to forget they bought something about one week or two after they bought it. So with less urgency more shoppers tend to keep their purchase.
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3: Returns builds trust and loyalty.

• 72% of consumers said they would spend more and buy more often with merchants that make the return experience simple.
• 77% of returns are done by repeat shoppers. Or to say differently, people who return a lot also tend to spend a lot, and they trust the brand. It means that they are actively engaged with the brand.
• 89% of repeat customers who had a good return experience are likely to buy again. The return experience is a good predictor for customer loyalty and overall customer NPS.
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On the topic of returns and loyalty I find myself often sharing this great quote by Tony Hsieh, CEO at Zappos, who makes a good case for more convenience to grow customer lifetime value:

“We also offer a 365-day returns policy for people who have trouble making up their minds. (Originally our returns policy was only 30 days, but we kept increasing it at the urging of our customers, who became more loyal as we lengthened the returns period.) Our returns run high — more than a third of our gross revenue — but we’ve learned that customers will buy more and be happier in the long run if we can remove most of the risk from shopping at Zappos.”
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What makes returns pragmatic for merchants?

Merchants have a different set of problems than shoppers when dealing with returns. Of course they deal with the delivery of a compelling experience. But they also deal with time consuming, highly manual and repetitive tasks which can be automated. They deal with lack of data and understanding. They deal with large and growing costs. Over hundreds of conversations we’ve come to identify interesting practices that can hopefully benefit the broader merchant community.

Here is a sample of some of these best practices. The full list is available in the guide we referenced earlier.

• Create specific policies for specific holidays - final sale & discounted items.
  
  It can be done for any other seasonal promotion or even all year long. Use product tags to exclude items or offer a store-credit-only refund on discounted items. By using product tags, you can create a smart way to manage returns specific items to protect profit. This is something Pragma’s Return Management System (RMS) can help you with.
• Invest in automation to handle large volumes.
  
  Just like e-commerce revenue, returns tend to be seasonal.Dealing with fast growth is overall a great thing for retailers. However a side effect of this growth comes when there are too many returns to handle effectively, leaving the customer with a poor experience. In order to keep on top of increasing returns, retailers should streamline the process by automating labels, tracking &refunds. By saving time on repetitive tasks, customer service is free to focus their time on value-add tasks, like building the relationship with the customer.

• Offer many ways to refund your shoppers. Leverage gift cards.
  
  Shoppers like choice. They already can choose from multiple refund methods on many other websites. Why limit them to one option i.e. original payment?
  
  By offering many refund options, you can enhance the experience. Shoppers love the convenience from having more control. This can help build trust in the brand.
  
  When customers choose gift cards as a refund option, you get to keep the money in your store. So you can encourage gift card refunds to improve your cash flow position. For example some merchants will deduct a fee for cash refunds, while they will offer gift card refunds for free. This gives an incentive for the shopper to opt for gift cards, while staying in control (they can still pick cash refund).
• Be transparent. Send email updates. Make tracking simple.
  
  Making the return process transparent can deliver many benefits. Confusion erodes brand trust. Uncertainty increases customer contact. By giving them the means to track their order themselves, and sending them email or SMS updates, you help your customers relax. You make them feel more important too.

Returns are the new normal in 2023, and will always be.
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Customers have a higher baseline expectation of convenience. Your return policy will influence whether they buy on your site or not, and how much and frequently they will buy. Is it key to equip yourself to deliver a compelling experience, while also ensuring you optimise returns for revenue and profit. We hope you enjoyed these insights and please reach out if you want to take your returns to the next level.

Tips to manage and reduce ecommerce returns

Detailed Product Descriptions and Images: Provide accurate and detailed product descriptions, including sizing charts and high-quality images, to set clear expectations for customers.

Size Guides and Fit Tools: Offer size guides or fit tools to help customers choose the right size, reducing the likelihood of returns due to sizing issues.

Transparent Return Policies: Clearly communicate return policies, including return windows, return shipping procedures, and refund processes, to set clear expectations for customers.

Quality Control Measures: Implement rigorous quality control measures to minimize the risk of shipping defective or damaged products.

Order Accuracy Checks: Double-check orders before shipping to ensure the correct items are being sent to customers, reducing errors in fulfillment.

Customer Support and Communication: Provide responsive customer support to address any pre-purchase questions or concerns promptly, helping customers make informed purchasing decisions.

Post-Purchase Engagement: Engage with customers post-purchase through personalized emails or messages to offer assistance, gather feedback, and encourage satisfaction with their purchase.

Product Reviews and Feedback Loops: Encourage customers to leave reviews and feedback, which can help identify common issues and improve product descriptions or quality.

Optimized Packaging: Use packaging materials that provide adequate protection to minimize the risk of shipping damage.

Continuous Improvement: Regularly analyze return reasons and patterns to identify areas for improvement and implement strategies to reduce returns over time.

By addressing these common reasons for returns and implementing proactive measures, D2C brands can effectively manage and reduce ecommerce returns, leading to improved customer satisfaction and operational efficiency.

How can Pragma help you manage ecommerce returns to maintain profitability?

Pragma’s RMS has reached far and wide in India due to 1 major reason -  its levels of customisable brand functionality, as it helps you integrate with 50+ Indian Multi-carrier/logistics partners, with a dedicated and branded return request page.

Brands can make sure that their return process looks personalised to the customer.

Exchange or Refund products with Pragma’s RMS

Furthermore, with return requests rising in number, you can put Return restrictions on select products that help the customer be aware of the no-return policy well in advance like; innerware, electronics above Rs. 2,500, etc.

This is further complemented by the addition of a Customisable multi-step approval process for accepting return requests, making sure you don’t receive random return requests from customers.

Customisable Multi-step approval for accepting return requests

While most of the RMS in the market provide a customisable dashboard, it becomes important to have a dashboard that has everything in one place.
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With Pragma, the brand gets access to:

1. Perform QC, Generate payment links, Store credit and initiate shipments all in one place

2. Leave comments to customers against their request - Add more details or reasons for rejection.
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With that being said, Pragma’s RMS is relentlessly empowering millions of users via its customer base of 450+. Let’s also see what benefits these features have on customers:

• The user feels personalised - Brand logo and colour customisations.

• One-click return/exchange request for users provides a seamless user experience.

• Get support for different kinds of refunds - Source, Coupons, Bank transfers and Store credit.

• Seamless browsing and selection during the exchange

• Accept exchange difference via COD or Prepaid

• Exchange with same or different product category
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Customising experience for a Customer-first approach

Do you know what’s the best part about Pragma?
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It's the Deep Analytical insights about customer behaviour that it provides. These can be very helpful in setting up an RMS largely due to the following reasons:

1. In-depth analytics on product performance, and pincode performance.

2. Access to Live data to build strategies on the go.

3. Multi-level nested reasons for better customer understanding. 

4. Assign different return reasons for different product types.

5. Flagging of risky users during order placement or return placement.
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It is important to understand that as you work towards enhancing the user experience, it is equally important to safeguard against fraudulent buyers exploiting the convenient return process for malicious purposes. 

Consequently, by utilising data gathered from 450+ D2C brands in India, Pragma can assist you in addressing these deceptive individuals.

Reach Out to Pragma TODAY!

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FAQs

1. What is the Ecommerce Returns Pragmatic Approach, and how does it differ from traditional return management strategies?

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The Ecommerce Returns Pragmatic Approach is a strategic framework that emphasizes proactive measures to turn returns into a competitive edge. Unlike traditional return management strategies focused solely on minimizing returns, this approach aims to leverage returns as opportunities for customer engagement, retention, and loyalty.

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2. How can Ecommerce Returns Management be transformed into a competitive advantage for businesses?

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By adopting a proactive and customer-centric approach to returns management, businesses can differentiate themselves from competitors. This includes implementing flexible return policies, providing hassle-free return processes, and using returns as opportunities to enhance the overall customer experience.

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3. What are some Return Management Strategies that D2C brands can implement to leverage returns as a competitive edge?

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D2C brands can implement several Return Management Strategies to transform returns into a competitive advantage. These include offering lenient return policies, providing easy return processes, incentivizing exchanges rather than refunds, and using returned products as opportunities for upselling or cross-selling.

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4. How does a customer-centric approach to Ecommerce Returns Pragmatic Approach benefit businesses in the long term?

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By prioritizing customer satisfaction and loyalty through a customer-centric approach to returns management, businesses can build stronger relationships with their customers. This leads to increased repeat purchases, positive word-of-mouth referrals, and higher lifetime customer value, ultimately driving sustainable growth and profitability.

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5. What role does technology play in optimizing Ecommerce Returns Management and turning it into a competitive advantage?

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Technology plays a crucial role in optimizing Ecommerce Returns Management by streamlining return processes, automating return authorization and tracking, and providing real-time analytics to identify trends and insights. Leveraging advanced technologies such as AI and machine learning can further enhance the effectiveness of return management strategies.

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